Karachi, July 13, 2025 – The Karachi real estate sector is once again under the microscope as the Federal Board of Revenue (FBR) rolls out new tax reforms under the Finance Act, 2025, which will affect the property valuations.
These changes, effective from July 1, are designed to improve transparency and reduce tax evasion in Karachi’s property market.
The FBR has revised the tax rates applied to property transactions. Now, buyers will benefit from lower tax rates, while sellers will face higher taxes. The goal is to promote genuine ownership and discourage speculative buying and selling that often distorts market trends.
These tax changes are closely tied to the official property valuation tables that the FBR uses to determine withholding taxes. On February 11, 2025, the FBR issued a legal order (SRO 144(I)/2025) updating the minimum benchmark values of property in Karachi. These rates are used when buyers or sellers declare values lower than market estimates. In such cases, the higher FBR-notified value will be used to calculate taxes.
This latest move follows a larger valuation overhaul from October 29, 2024, when the FBR issued SRO 1724(I)/2024, revising property values in 237 areas across Karachi. These reforms aimed to bring declared prices closer to real market values and eliminate the common practice of underreporting property values to pay lower taxes.
FBR officials say under-declaring property prices was one of the main methods used to dodge taxes. Buyers and sellers often agreed to show lower prices on paper, costing the government billions in lost revenue. The new valuation system is designed to put an end to such practices.
Experts believe that these combined efforts—revised tax rates and more realistic valuation benchmarks—will help formalize Karachi’s property market. In the short term, some slowdown in investment may occur, especially in speculative segments, but the long-term impact is expected to be positive. By closing loopholes and encouraging fair practices, the reforms are likely to boost investor confidence and make Karachi’s property sector more stable, transparent, and trustworthy for all stakeholders.